December 2013, Auto Dealer Today - Feature
The Telephone Communications Protection Act (TCPA) is a comprehensive consumer protection law that was originally passed in 1991. It has been updated several times to reflect changes in the way we communicate, and it has proven to be very flexible: The TCPA was used to regulate fax blasts, establish the national Do Not Call registry and create the CAN-SPAM Act.
Each time the law has changed, auto dealers have had to update their processes to remain compliant. When the Do Not Call registry was created, for example, you had to put a process in place to check phone numbers against the list. You may also have been aware of an exemption that allowed an 18-month window to call someone on the list if you had an established business relationship.
This year, the TCPA underwent a new round of changes. They went into effect in February, but the enforcement was delayed until October 16. This round of changes severely limits communication with customers in several new ways.
The law now says you must have express written consent to make a call to customers using automatic dialing systems, artificial or prerecorded voice messages, or any SMS text messages to wireless phones. For more details, let’s take a look at a few frequently asked questions.
Q: Are the new rules intended to limit calls to cell phones?
A: Yes. The TCPA was updated to curb unsolicited telemarketing calls to wireless phones. Wireless customers are typically billed by usage. Customers do not want telemarketers to use up their minutes or put a dent in their data allotment with unwanted texts.
Q: Do these rules apply only to telemarketers?
A: No. The act was originally created in response to customer complaints about telemarketers. But the act’s jurisdiction has expanded to cover just about any business that makes outbound prospecting calls to consumers.
Q: How could dealers be affected?
A: The TCPA relies on the Federal Communication Commission (FCC)’s definition of an automatic telephone dialing system. That includes any equipment that has the capacity to dial numbers without human intervention. In other words, you don’t have to use the automatic dialing feature to run afoul of the law; your system just has to have that functionality.
Does your telephone system — or computer system, if you are using voiceover IP — have the ability to dial without human intervention? Does your store have the ability to extract a phone number from your CRM and dial without someone in your store punching numbers on the phone? Remember, you don’t actually have to use those features to violate the new rules.
You also may be at risk if you use third-party services to send broadcast messages, SMS messages or even updates and alerts from your service department. Any text message that is a solicitation of any sort and delivered without consent is now prohibited. If you fail to secure your customers’ written consent, you may be in violation.
Q: What’s the penalty?
A: The fines for violations range from $500 to $1,500 per call or text made to any wireless number if you can’t prove you had written consent to call. Opportunistic attorneys are already soliciting consumers to report businesses that break the new rules. If your dealership lands on their radar, they can subpoena your phone records to look for every possible violation. Those penalties can add up in a hurry. Jiffy Lube was caught sending text messages to service customers and had to settle a $47 million lawsuit.
Q: If I only call landlines, I won’t have any problems, right?
A: Wrong! How do you know whether it actually is a landline? Phone numbers are portable these days. The home phone number you stored in your CRM yesterday could be a cell phone tomorrow. Additionally, mobile numbers are more likely to change hands. You might call a customer’s “good” number and find it now belongs to someone else. You will need to put a system in place to verify your customers’ numbers on an ongoing basis.
Q: What about customers with whom I have an established business relationship?
A: Unlike the Do Not Call registry, there is no exemption for prior customers under the wireless rules — not 18 months, not even an hour.
Each customer must give express written consent for you to call their cell phone. There is one (and only one) exemption, and it happens to be very useful to dealers: If a customer completes a credit application, and they provide you their cell phone number, that establishes implied consent for you to use it.
Of course, credit applications are only a small part of your business. Every lead form on your website and repair order must have a consent disclosure if you want to use the wireless numbers provided to contact the customer. You also must maintain a record of consent for four years, which means your credit applications now have a shorter shelf life.
Q: What about references?
A: There is no exception for references provided by your customers. Your managers and staff should ask for landline numbers or find other ways to contact references.
Q: What can I do to minimize risk?
A: Luckily, there are several steps you can take today to minimize the risk of a violation:
• Add a clear and conspicuous disclosure to every online form that asks for a phone number. To see an example, click on the “Apply Now” tab at www.877carcredit.com.
• Update all paper forms in every department — including sales, finance and service — on which you ask for a phone number. Be sure your credit apps include an appropriate disclosure as well.
• Verify your database. Be sure that all the phone numbers you have on file are marked as landlines or cells. Many CRM systems will have to make adjustments to accommodate these new laws. The only place I know to conduct a phone number database verification is RealPhoneValidation. For a quote on what it will cost to check your database, visit realphonevalidation.com/ucu-quote/. Look into setting up ongoing, real-time validation as well.
• If you use third-party providers to make prerecorded calls or send SMS messages, you must be sure they are in compliance as well. They should have no problem sharing their written verifications and disclosures. The law applies to any person within the U.S., so some vendors may choose to offshore the dialing to avoid regulation. Whether you really want a service in Singapore calling your customers is up to you.
Dealers need to be proactive on this issue. After one lawsuit against a dealership, the floodgates will open. But this story is not legal advice and should not be relied upon as such. For more information on this law and how it will affect your dealership, consult your attorney and look for updates at www.fcc.gov.
About the Author
Harlene Doane is COO at Used Car University and organizer of the annual Used Car University Convention. She is the former editor of Auto Dealer Monthly and an expert in dealership accounting and operations.